Dow to crash to 6,000 by 2016: financial author

A lot of contrarian investors expect the Dow Jones Industrial Average (DJIA) to crash at some point in the near future because of a variety of factors, including the paucity of sound fundamentals, the Federal Reserve’s implosion and the numerous bubbles currently formulating and growing.

One financial author recently told CNBC that he thinks the Dow will likely climb to 17,000, a 3.6 percent increase from this week’s 16,396, in the next several weeks but then crash back down to around 6,000 by 2016, a 63 percent plummet.

“I think we see another correction, crash, that is larger than the last one,” Harry Dent told the business news outlet Tuesday. “Every bubble — and these are bubbles — has taken us to new highs, and every crash has taken us to new lows. I think this will be the most dangerous period in people’s lives in investing.”

The author of “The Demographic Cliff: How to Survive and Prosper During the Great Deflation of 2014-2019″ explained that with aging workers on the verge of retirement it will likely put an intense strain on the federal and state governments’ resources. On top of this, younger workers won’t be spending enough to swap that stimulus.

“Generations spend and then they don’t,” Dent argued. “Governments are fighting that with massive stimulus, and it shows why the economy is so weak with so much stimulus. Demographics is the only way you can explain that.”

We reported in November that Peter Schiff, president of Euro Pacific Capital, warned that the Dow will likely crash below 13,000 once the stock market realizes that the supposed economic recovery has been fallacious and bad monetary policy is the culprit for an artificial economy.

David Stockman, former budget director during the Reagan administration, also warned in a New York Times op-ed piece early last year entitled “State-Wrecked: The Corruption of Capitalism in America” that the stock market itself will crash.

“Over the last 13 years, the stock market has twice crashed and touched off a recession: American households lost $5 trillion in the 2000 dot-com bust and more than $7 trillion in the 2007 housing crash,” Stockman, who is now an investment banker, wrote. “Sooner or later – within a few years, I predict – this latest Wall Street bubble, inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains, will explode, too.”

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